Thursday, February 22, 2024

Understanding the FTSE 100 Index

The FTSE 100 Index or the Financial Times Stock Exchange 100 Index, is made up of the top 100 largest listed companies on the London Stock Exchange (LSE). This index is also informally called the “Footsie”. The companies listed in it are referred to as ‘blue chip’ companies. The index also acts as the barometer of the UK stock market.

Established on January 1984, the FTSE 100 Index is just one of the indexes that are operated by the FTSE Group. However, this index is the most widely known of all the others. It started with the base value of 1,000.00 and has grown throughout the years. It is now at the level of 7,000 as of March 2018.

What Is the FTSE Group?

The FTSE Group is a merger between The Financial Times and the London Stock exchange, thus having the acronym FTSE. The FTSE Group is responsible for evaluating the overall performance of the companies that are listed in its indexes. It also monitors bonds that are held as well as given by the companies.

The group handles other FTSE indexes such as the FTSE 250, FTSE 350, FTSE All-Share and the FTSE4Good.

How to Become Listed in the FTSE Index or ASX 200?

Being a listed company, or a ‘constituent’ of the FTSE or ASX has certain requirements. Let’s take the ASX 200 as an example, the companies that are listed in the ASX 200 are checked quarterly.

The reports are usually done on the Wednesday after the first Friday’s of March, June, September and December. Changes in the listed companies that make up the index will then be based on the numbers gathered from the company’s close on the night before.

How Is the Index Calculated?

The FTSE 100 level or its single quoted value you see is calculated from the total market capitalization of the listed companies. Since the share prices change on a daily basis, the quote of the index also changes daily. The index is calculated on every trading day, or every week day (except on public holidays in the UK). It starts from 8:00 am and closes at 1:30 pm.

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